Life’s a budget and then you retire

The title of this post is a variation of life’s a bitch and then you die. I somehow always believed in the power of not budgeting. Of automated savings and conscious spending to avoid lifestyle inflation. I rather relaxed while the ‘beginners’ were deciding how much to spend on groceries, personal care, and entertainment each month with online tools and templates. Good for them, but definitely not something I needed.

For me not budgeting was the same as doing myself a huge favor. I stare at a screen 40+ hours a week at work. Drinking a beer on my balcony was far superior to moving tiny numbers around in some nightmare budgeting tool. And I still see it this way to some extent.

I could afford this attitude. And as I am very susceptible to taking the path of least resistance, budgeting didn’t stand a chance.

But why write this post if you’re happy with not budgeting?

For the very simple reason that I have seen the light and started to make a budget.

What happened Marc? Did someone hit you on the head?

YES. My bank.

I was so relaxed (drinking beer on my balcony and only focusing on the automated savings) that I didn’t even bother to check my accounts in recent months. Turned out my balance had gone negative. Enough for my bank to send me a letter in which they stated that ‘I had probably forgotten to transfer additional funds’. In other words, transfer funds now or we will close your account.

Shame on you Marc! You self-proclaimed personal finance wise-guy!

But nothing is bad without being good for something and the last thing I was going to do was selling assets to replenish my account.

But Marc, just use a bit of your emergency fund. Problem solved! Right?

(Coughs…)

Don’t tell me you have no emergency fund! You’re the laughing stock of the FIRE community!

Called my bank to explain and arrange an overdraft limit for the current month.

Made a budget (in some nightmare online template). What’s my income this and next month? What are my expenses? Groceries? Entertainment?

Had another glass of whiskey.

Realized that if I controlled my spending, delayed a few transactions, worked a bit harder (to get a bonus), I’d be ‘the man’ again within one month. ‘The man’ equaling ‘no overdraft’.

Decided I need an emergency fund (not for fixing overdrafts)

Saw a football match.

Took a shower.

Drank a…

Marc…enough!

I was going to say ‘a glass of milk’!

Anyway, what an eye opener! I thought I was good at controlling my spending, but it was quite a shock to realize that while I was good at staying away from unnecessary gadgets, I wasn’t good at all to control spending for more day-to-day things. Like groceries for example. And entertainment.

Not entirely true. I knew I didn’t really control it.

What did surprise me is how much money I am able to save by being a bit more conscious about what I put in my shopping cart at the grocery store, the amount of entertainment I allow myself in a given month, etc.

I am not going totally frugal. That’s not me (well not yet, but who knows what the future will bring). But from now on I will make a monthly budget in order to achieve the following:

I just realized how much money I have been wasting all these years. I probably would have reached FIRE already if only I had been more conscious about my spending! Well, I don’t regret it. Not having a budget hasn’t been all bad. It’s just that the time has come to have one! 🙂

Ouch! If this sort of thing can happen to a personal finance blogger, imagine how many times it occurs to the average person! If nothing else, this shows how easy it is to fall into that trap; at least you have the ability to quickly right this wrong, whereas some people will just find themselves getting deeper and deeper into debt.

I don’t have a budget as such, other than “spend less than I earn.” However, I do track my spending and examine it every month, so I can see where my money is going. This means that one month I might spend £300 on travel, and the next month, nothing. But at the same time, I might spend £50 on eating out one month and £150 the next. I don’t restrict the amount I can spend in any one category in any one month, I just try to ensure that I don’t spend more than 75% of my income each month.

Indeed, I am in the fortunate position that I can turn this around in no time and make sure it doesn’t happen again. For many others it may not work that way.

Your approach sounds good. As for me, I need a few months with budgets, visibility and transparency down to individual categories to help me limit my expenses. It is no rocket science, but it is new for me. I guess I had gotten a little bit too laid back… 😉

Anyway, I see this as an opportunity. To save more, whether it is for FIRE, an emergency fund or something completely different.